I'm claiming the £250,000 Wolfson prize for how to break-up the euro

David Owen of the investment bank Jefferies reminds me that the submissions deadline for the £250,000 Wolfson prize for the most optimal, least traumatic way of achieving breakup of European Monetary Union is upon us – 31 January.

Personally I cannot see why it's necessary to offer such a prize, though I will happily take it for the following, modest little proposal. It's perfectly simple. Each euro would be swapped for one new euro plus units in the new currency of which ever country is exiting in proportion to its share of eurozone GDP. For instance, if Greece were to leave, the euro would be split 97.5pc new euro and 2.5pc new drachmas. I may have been a bit mean in my assessment of Greece's share of eurozone GDP, but you get the picture.

The same calculation would apply to other departing nations. In so doing, many of the potentially catastrophic consequences for a country in simply exiting and swapping their national euros for a new national currency could be avoided. Owners of German euros would have to take their 2.5pc share of new drachmas alongside the Greeks. Since it would not be possible to spend the new drachmas anywhere but Greece, they would rapidly flow back to the country of origin. Greeks would sell their new euros to buy new drachmas, and so on.

Of course, it is possible that the new drachmas would become essentially worthless, with Greeks continuing to favour use of euros over the new currency to buy and sell things and transact their business. But such a possibility could be relatively easily overcome if the government was immediately to start paying workers and contracting for public spending in the new national currency.

No doubt readers will find many flaws in this proposal. I can think of several myself. But the brief was to find the optimal way of doing it, and this way seems to overcome some of the major drawbacks of a conventional breakup – those of catastrophic capital flight (actually, much of this has already occurred) and contractual default, leaving eurozone creditors with crippling losses.